Get in touch

Offices

Practice Forex With A $100K Demo Account

Assessing the risk of open positions on weekends

There are several reasons not to leave a position open over a weekend in most markets. In FX, one reason is purely financial in as far as the margin requirement to fund that position doubles or more. As you are probably aware, the margin is set by the ‘broker’ in the FX markets. In the regulated futures markets the margin is set by the clearing house and/or the exchange.
This must surely be a sign that holding a position over a weekend is, or can be, dangerous. The danger comes from the fact that the markets are closed and hence any stop loss would be ineffective if the market were to gap over your level. This applies equally to the futures market or any market that does close from one session to the next. Interestingly, a market can even gap over a price level intraday!

A perfect example was seen in the EurUsd pair. That market finished at 1.30396 at the end of one week and opened at 1.30567. The actual prices may be different on your trading platform. This was a gap on the open of .00171 (even though I marked it as .0015 on the chart). No big deal perhaps, although the actual $$ difference will have depended on the size of position you had held over the weekend.

Historically, the largest gap on the open over a weekend that I have seen has been 300 pips in the Yen. Painful or mega-rewarding! That depends on which side you were on!

Trading is a tough game at the best of times, so why take the extra gamble when it is not necessary to do so.

DISCLAIMER: This material on this website is intended for illustrative purposes and general information only. It does not constitute financial advice nor does it take into account your investment objectives, financial situation or particular needs. Commission, interest, platform fees, dividends, variation margin and other fees and charges may apply to financial products or services available from FP Markets. The information in this website has been prepared without taking into account your personal objectives, financial situation or needs. You should consider the information in light of your objectives, financial situation and needs before making any decision about whether to acquire or dispose of any financial product. Contracts for Difference (CFDs) are derivatives and can be risky; losses can exceed your initial payment and you must be able to meet all margin calls as soon as they are made. When trading CFDs you do not own or have any rights to the CFDs underlying assets.

FP Markets recommends that you seek independent advice from an appropriately qualified person before deciding to invest in or dispose of a derivative. A Product Disclosure Statement for each of the financial products available from FP Markets can be obtained either from this website or on request from our offices and should be considered before entering into transactions with us. First Prudential Markets Pty Ltd (ABN 16 112 600 281, AFS Licence No. 286354).FP Markets does not accept applications from U.S, Japan or New Zealand residents or residents from any other country or jurisdiction where such distribution or use would be contrary to those local laws or regulations.